Losses on small-business stock



For many taxpayers, income is generated from earnings, like salaries and wages. Cash generated from earnings is then invested rather kept in the bank with hopes of higher investment income, such as capital gains. In many cases, taxpayers invest in stocks.

A subsequent sale of the stock could result in capital gains. This capital gain could be exempt from tax for low-income taxpayers or taxed at 15% or 20%, depending on the income of the taxpayer. Thus, favorable tax rates — 0%, 15% or 20% — exist for long-term capital gains compared . . .

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